The New Revenue Sharing Act 2008 to 2013: Fundamental Reform Again Postponed

The Revenue Sharing Act 2008 carries no fundamental reform of the existing federal financing arrangements. The long-criticised deficiencies of the system remain for the most part unaddressed. Thus, the revenue autonomy at the sub-national level continues to be very limited. Nevertheless, the states (Länder) gain some autonomy over revenues by the fact that major transfers from the federal government are converted into revenue shares that are generally not earmarked for specific purposes. The modulated population apportionment formula is again moderated in favour of the smaller local communities. The financial endowment of the Länder will be improved in several areas (teaching personnel of the Länder, child care facilities, hospital financing), and financing arrangements have been settled for a means-tested basic income and day-round home nursing care. Together with the Revenue Sharing Act 2008, a new national Stability Pact has been concluded, likewise for a period of six years.